Question 1

Exhibit 12-3 Unemployment categories $$\begin{array} { | l | c | } 
\hline \text { Category } & \text { Workers } \
\hline \text { Frictional unemployment } & 250 \
\text { Structural unemployment } & 350 \
\text { Cyclical unemployment } & 600 \
\text { Discouraged workers } & 400 \
\text { Underemployment } & 450 \
\hline
\end{array}$$ According to data in Exhibit 12-3 and assuming the total number of people working  is 8,400, the unemployment rate is

Accepted Answer

The unemployment rate is calculated by dividing the number of unemployed individuals by the labor force and then multiplying by 100 to get a percentage. In this case, the unemployed individuals include those in frictional, structural, and cyclical unemployment categories, totaling 250 + 350 + 600 = 1200. The labor force includes the total number of people working (8,400) plus the unemployed (1,200), totaling 9,600. Therefore, the unemployment rate is (1,200 / 9,600) * 100 = 12.5%.

Question 2

Exhibit 12-2 Unemployment categories $$\begin{array} { | l | c | } 
\hline \text { Category } & \begin{array} { c } 
\text { \# of } \
\text { Individuals }
\end{array} \
\hline \text { Frictional unemployment } & 20 \
\text { Structural unemployment } & 35 \
\text { Cyclical unemployment } & 60 \
\text { Discouraged workers } & 5 \
\text { Underemployed workers } & 10 \
\text { Fully employed workers } & 410 \
\text { Population } & 900 \
\hline
\end{array}$$ The unemployment rate for the economy in Exhibit 12-2 is:

Accepted Answer

The answer of Exhibit 12-2 Unemployment categories \[\begin{array} { |...

Question 3

An example of frictional unemployment is a(n):

Accepted Answer

Frictional unemployment occurs when individuals are temporarily unemployed while transitioning from one job to another. The computer programmer leaving one job and accepting a new job is an example of this, as they are between positions by choice for a potentially short period.

Question 4

Structural unemployment is unemployment caused by:

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills that workers possess and the skills required for available jobs. This type of unemployment can occur when technological changes or shifts in the economy lead to a decline in demand for certain types of jobs while creating new demand for other types of jobs that require different skills. It can also occur when workers do not have the skills that employers require for available jobs, such as educational or professional qualifications.

Question 5

Exhibit 12-2 Unemployment categories $$\begin{array} { | l | c | } 
\hline \text { Category } & \begin{array} { c } 
\text { \# of } \
\text { Individuals }
\end{array} \
\hline \text { Frictional unemployment } & 20 \
\text { Structural unemployment } & 35 \
\text { Cyclical unemployment } & 60 \
\text { Discouraged workers } & 5 \
\text { Underemployed workers } & 10 \
\text { Fully employed workers } & 410 \
\text { Population } & 900 \
\hline
\end{array}$$ Find the BLS's rate of unemployment from the following data: frictional unemployment = 150, structural unemployment = 200, cyclical unemployment = 225, discouraged workers = 25, underemployed workers = 75, fully employed workers = 850, total population = 2,000.

Accepted Answer

The answer of Exhibit 12-2 Unemployment categories \[\begin{array} { |...

Question 6

The unemployment rate will decrease whenever there is a(n):

Accepted Answer

Unemployment rate is calculated by dividing the number of unemployed individuals by the total labor force (employed and unemployed individuals). Therefore, the unemployment rate will decrease whenever there is a decrease in the number of unemployed relative to the size of the labor force. Option A is incorrect because an increase in the number of persons classified as unemployed will increase the unemployment rate. Option C is incorrect because a decrease in the size of the population does not necessarily affect the unemployment rate unless it also affects the labor force. Option D is incorrect because a reduction in the size of the labor force will decrease the total number of employed and unemployed individuals, which could result in a lower unemployment rate, but this is only if there is also a decrease in the number of unemployed individuals.

Question 7

Sam is a musician who is out of work because electronic equipment replaced live musicians. This is an example of:

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills and qualifications of workers and the requirements of available jobs. In this case, technological advances have replaced the need for live musicians, creating a structural mismatch in the labor market for musicians like Sam who do not have skills in electronic music or production.

Question 8

Unemployment that is of a short duration to allow time to find a new job is:

Accepted Answer

Frictional unemployment refers to the temporary unemployment that arises from the time that individuals spend searching for new employment opportunities. It includes people who are temporarily between jobs, such as recent college graduates.

Question 9

The unemployment rate will increase whenever there is a(n):

Accepted Answer

The unemployment rate is calculated as the number of unemployed individuals divided by the size of the labor force, which includes both employed and unemployed individuals actively seeking work. Choice A describes an increase in the numerator but does not take into account changes in the denominator, so it is not sufficient to conclude that the unemployment rate will increase. Choice C only considers changes in population size and not changes in employment, so it does not provide a clear indication of what will happen to the unemployment rate. Choice D suggests a decrease in the size of the labor force, which would make it harder for individuals to find work but would not necessarily increase the unemployment rate if many individuals choose not to actively seek employment.

Question 10

Exhibit 12-3 Unemployment categories $$\begin{array} { | l | c | } 
\hline \text { Category } & \text { Workers } \
\hline \text { Frictional unemployment } & 250 \
\text { Structural unemployment } & 350 \
\text { Cyclical unemployment } & 600 \
\text { Discouraged workers } & 400 \
\text { Underemployment } & 450 \
\hline
\end{array}$$ According to data in Exhibit 12-3 and assuming the total number people working is  8,400, the civilian labor force is

Accepted Answer

The civilian labor force includes employed and unemployed workers actively seeking work. Add the employed (8,400) and unemployed (250+350+600) to get 9,600. Discouraged workers and underemployment are not included in the labor force calculation.

Question 11

A general mismatch between the skills of unemployed workers and the skills needed by employers with job openings results in:

Accepted Answer

The situation described is an example of structural unemployment, where there is a mismatch between the skills of unemployed workers and the skills needed by employers with job openings. This type of unemployment tends to persist even during periods of economic growth or stability. Frictional unemployment arises from workers taking time to search for suitable jobs and is a natural consequence of a dynamic economy. Cyclical unemployment is related to fluctuations in the business cycle, where jobs are lost due to a recession or economic downturn. A higher labor force participation rate refers to the percentage of the working-age population that is employed or actively looking for work, and is not directly related to the skill mismatch issue.

Question 12

Which of the following offers an example of structural unemployment?

Accepted Answer

Structural unemployment refers to a mismatch between the skills and qualifications of workers and the available jobs. In this example, the development of gasoline-powered automobiles and the resulting decline in horse-and-buggy transportation created a mismatch between the skills of workers in the horse-and-buggy industry and the available jobs in the automobile industry, resulting in long-term unemployment for some workers.

Question 13

Bob is unemployed because his skills have become obsolete due to technological advances. This is ____ unemployment.

Accepted Answer

Bob's unemployment is due to structural factors, specifically the fact that his skills are no longer in demand due to advances in technology. This is different from frictional unemployment (short-term unemployment due to workers searching for a better job) or cyclical unemployment (caused by a downturn in the business cycle). It is also not seasonal unemployment, which is typically linked to fluctuations in demand or weather patterns.

Question 14

Frictional unemployment refers to:

Accepted Answer

Frictional unemployment refers to short periods of unemployment needed to match jobs and job seekers. This type of unemployment occurs when individuals are in between jobs or are searching for a job that better suits their skills and qualifications.

Question 15

The primary cause of frictional unemployment is:

Accepted Answer

Frictional unemployment occurs when there is a mismatch between the jobs available and the skills or locations of the workers. This can be due to inaccurate or incomplete information about job opportunities, making it a temporary and natural part of the job market as people transition between jobs.

Question 16

Althea, a brilliant new Ph.D. in economics, has turned down many job offers because she hopes eventually to teach at one of the top 10 universities in her field. The type of unemployment she is experiencing is:

Accepted Answer

Althea is experiencing frictional unemployment, which occurs when individuals are between jobs or are searching for new jobs. Althea has turned down job offers, indicating that she is actively searching for the right opportunity, and is not unemployed due to a lack of available jobs in her field or a mismatch of her skills with available jobs (which would be structural unemployment). She is also not underemployed, as she is not currently employed but seeking full-time work. Finally, she is not experiencing cyclical unemployment, which is caused by fluctuations in the overall economy, as her unemployment is not related to business cycles.

Question 17

A person who voluntarily quits his/her job in New York and expects to get a similar job in Los Angeles is an example of:

Accepted Answer

This scenario describes frictional unemployment, which occurs when people transition between jobs or enter the workforce for the first time. It is a type of unemployment that is considered to be natural and unavoidable in any economy.

Question 18

Suppose the official unemployment rate is 10 percent. We can conclude without question that:

Accepted Answer

The official unemployment rate is calculated by dividing the number of unemployed individuals by the number of individuals in the civilian labor force. Therefore, if the official unemployment rate is 10 percent, it means that one out of every 10 people in the civilian labor force is currently unemployed. It does not provide information on how long individuals have been unemployed or if they were unemployed for the entire year.

Question 19

An individual who is employed part time, but is looking for a full-time job, is classified as:

Accepted Answer

This individual is considered employed because they have a job, even though it is part-time and they are seeking full-time employment. The classification of employment does not depend on the desired amount of work but on the current employment status.

Question 20

Exhibit 12-2 Unemployment categories $$\begin{array} { | l | c | } 
\hline \text { Category } & \begin{array} { c } 
\text { \# of } \
\text { Individuals }
\end{array} \
\hline \text { Frictional unemployment } & 20 \
\text { Structural unemployment } & 35 \
\text { Cyclical unemployment } & 60 \
\text { Discouraged workers } & 5 \
\text { Underemployed workers } & 10 \
\text { Fully employed workers } & 410 \
\text { Population } & 900 \
\hline
\end{array}$$ Consider an economy made up of 100 people, 50 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The unemployment rate is approximately:

Accepted Answer

The unemployment rate is calculated as the number of people looking for work divided by the labor force (employed + looking for work). Here, it's 10/(50+10) = 10/60 = 0.1667, or approximately 17 percent.

Quiz 12: Business Cycles and Unemployment

An example of frictional unemployment is a(n) :